Credit Suisse to Pay $90M, Drop Bankruptcy Claims in Enron Settlement

Switzerland's Credit Suisse Group will pay $90 million in cash and withdraw millions more in bankruptcy claims to settle its part of Enron Corp.'s massive "mega-claims" lawsuit alleging the bank assisted Enron insiders in a scheme to hide a mountain of debt through the use of complex structured finance deals.

Enron's complaint, which spans about 500 pages and sets out 76 counts of alleged wrongdoing, has been pending in the U.S. Bankruptcy Court for the Southern District of New York since September 2003. The company filed its bankruptcy petition in that court in December 2001.

In addition to Credit Suisse, the complaint names nine banks and about 100 of their affiliated financial institutions and trusts.

The lawsuit says the banks' deals with Enron allowed company insiders fraudulently to record more than $9 billion as operating cash flow and $1 billion as income and to understate Enron's debt by more than $11 billion.

The insiders' accounting shenanigans ultimately led to the energy trader's collapse, the complaint alleges.

Zurich-based Credit Suisse, which did not admit any liability or wrongdoing, will pay the Enron estate $90 million and drop bankruptcy claims against the estate worth about $337 million, Enron said in a press release May 9.

The agreement preserves about $92 million in claims the bank previously sold to third parties, Enron said.

U.S. Bankruptcy Judge Arthur J. Gonzalez must approve the settlement.

Last year J.P. Morgan Chase, Toronto-Dominion Financial Group, Canadian Imperial Bank of Commerce, Royal Bank of Canada and Royal Bank of Scotland Group separately settled the suit for a combined payout to Enron of about $800 million.

Banks yet to settle include Barclays PLC, Citigroup Inc., Deutsche Bank AG, Fleet National Bank and Merrill Lynch & Co.

Enron emerged from bankruptcy in November 2004, but Judge Gonzalez continues to oversee so-called "adversary" litigation, including the mega-claims suit, spawned by the reorganization case.